In an interview published by the European Central Bank on 10 June 2026 (originally conducted on 19 May 2026 and published in Het Financieele Dagblad on 3 June 2026), Frank Elderson, Member of the Executive Board and Vice-Chair of the Supervisory Board of the European Central Bank (“ECB”) stressed that the debate on regulatory simplification should not weaken the information basis banks need to manage their risks. The interview forms part of a broader ECB message that non-financial risks, including climate- and nature-related risks, can become material financial risks for banks. The full interview is available at this link.

Elderson warned in particular against excessive deregulation under the label of simplification. In his view, banks must remain able to identify and manage relevant risks properly, and this requires reliable, harmonised and accessible ESG-related data from the companies they finance. The ECB has repeatedly argued that simplification can be justified, but only if it does not undermine the resilience of the financial system.

As Elderson explained, supervisors are now also dealing with the consequences of simplified regulation. For example, the European Commission wants to raise the threshold for companies required to report on their sustainability performance from 250 to 1,000 employees.

He said in this respect the following: “We set out our Opinion on this at the ECB last year. Our core message was: we understand the desire to simplify, but be careful not to go too far. Banks need to manage their climate- and nature-related risks, and to do so they need data from their clients. If legislators require those clients to publish harmonised data, banks can simply retrieve that data from company websites – without additional hassle for their customers.

If that reporting obligation for companies is removed, however, the need for the data does not disappear for banks. One likely consequence is that banks and insurers will have to burden their clients directly with questionnaires. What is intended as simplification for businesses could therefore, in practice, lead to even more bureaucracy instead. This underlines the ECB’s broader point: good-quality ESG data is not only a reporting issue, but a prerequisite for sound risk management and effective supervision.”